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What's in the Cards for Anthem's (ANTM) Earnings in Q1?

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Anthem Inc. will release first-quarter 2020 results on Jan 29, before market open.

In the last reported quarter, the company’s earnings of $3.88 per share missed the Zacks Consensus Estimate by 0.5% due to high expenses. However, the bottom line surged 59% year over year, driven by solid revenues and the successful launch of IngenioRx.

Let’s see how things are shaping up prior to the announcement.

The company’s performance is likely to have been driven by increased revenues. The Zacks Consensus Estimate for first-quarter revenues stands at $28.7 billion, implying a 17.7% increase from the prior-year reported number. Several factors, such as improved premiums and rising membership are likely to have fuelled growth for this metric. The consensus mark for premiums suggests a hike of 9.9% from the prior- year reported number.

The consensus mark for Government business revenues indicates a 10.2% improvement from the year-earlier reported figure. The company’s Commercial & Specialty Business segment might have also contributed to its top line. The consensus estimate for the same hints at an 8.2% increase from the prior-year reported number.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $6.59, suggesting a 9.3% increase from the year-ago reported figure. This impressive upside is likely to have been aided by the company’s solid revenue base.

Per its last earnings call, management expected that earnings in the first half of 2020 will be around 55% of full-year outlook ($22.30) with little more than half of the same level to be achieved in the first quarter. This brings first-quarter earnings to more than $6.13 per share.

Anthem is expected to have continued growing its specialty businesses in the first quarter.

Based on the number of working days in the first quarter (leap year), the HIF-adjusted Medical Loss Ratios likely to have expanded 100 basis points from the year-earlier reported figure.

The company is likely to have witnessed strength in Medicaid members on the back of contract wins. Its Medicare business is also expected to have gained traction from its plans and value-based care structure.

Additionally, Anthem is likely to have benefited from a steady cash flow in the first quarter.

However, the company might have incurred heavy selling, general and administrative expenses due to growth-related investments. Additionally, it might have borne high medical costs pertaining to value-based care arrangements.

What the Quantitative Model States

Our proven model predicts an earnings beat for Anthem this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which you can see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Anthem has an Earnings ESP of +1.28%. This is because the Most Accurate Estimate is pegged at $6.67, higher than the Zacks Consensus Estimate of $6.59.

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. Price and EPS Surprise

Anthem, Inc. price-eps-surprise | Anthem, Inc. Quote

 

Zacks Rank: Anthem carries a Zacks Rank #3, which increases the predictive power of ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are a few other stocks worth considering from the medical sector with the perfect mix of elements to also beat on earnings in the respective upcoming releases:

Centene Corporation (CNC - Free Report) has an Earnings ESP of +21.25% and a Zacks Rank of 3. The company is scheduled to release first-quarter earnings on Apr 28.

Humana Inc. (HUM - Free Report) is slated to announce first-quarter earnings on Apr 29. The stock has an Earnings ESP of +11.37% and a Zacks Rank #3.

Molina Healthcare, Inc. (MOH - Free Report) is set to report first-quarter earnings on Apr 30. The stock is #3 Ranked and has an Earnings ESP of +9.38%.

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